Impending capital adequacy changes have forced self-invested personal pension (Sipp) providers to consider their long-term viability. Several large books of business have changed hands over the past year, with more undoubtedly to come.
With any luck, your clients will not be affected. But what should you do if your client’s Sipp provider is sold to another?
1. Check the terms of sale. There are three methods by which a Sipp book might be transferred: corporate acquisition, scheme acquisition or transfer of member assets. As detailed further in MM’s feature on Sipp businesses being bought and sold, these will affect your clients in different ways, so it is important to know which one applies.
2. Consider whether the new operator will be a long-term player. Is the acquirer buying books for the long game or are they likely to become acquired, creating more uncertainty for your client?
3. Analyse what the new fee structure will be. Depending on your client’s investments – and the terms of the acquisition – remaining with the new provider might spell worse value for your client. Conversely, they might be more cost-effective for your client as business is being consolidated.
4. Look at whether the new owner has the capacity to manage more Sipps. If a provider that you know is poor on admin takes on a whole new set of business, you are perfectly justified in asking how they will manage those Sipps effectively.
5. Weigh up the costs and benefits of moving or staying put. Don’t forget to account for transfer in/out costs and whether in-specie transfers are allowed. The new provider may be more flexible on investments or restrict what your client can do; each will have to be looked at on a case-by-case basis.
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